The LSR Group sub-holding Aeroc International, an aerated concrete producer, has started implementation of two aerated concrete projects — one in Ukraine and one in Lithuania. The total amount of investments is Euro 57 million, accumulated capacities of the two plants is 800 thousand m?. This way, Aeroc will satisfy the concrete hunger experienced by Ukrainian, Lithuanian, Kaliningrad, and Latvian builders. The LSR Group makes these outreaches of the new markets under its strategy of geographic expansion, accepted by the holding CEOs in 2006.

Ukraine. Euro 30 million is the amount of internal and borrowed assets which Aeroc International will invest in Ukraine into construction and technical provision of the new aerated concrete plant in Berezan, Kyiv province. This is the first enterprise in Ukraine belonging to Aeroc International and the LSR Group as a whole. Its annual capacity is 400 thousand cubic meters of aerated concrete AEROC. The enterprise industrial commission is scheduled for mid year 2008.

«In the course of a year our analysts had been studying the situation in the construction market of Ukraine, and they came to a conclusion that we have good perspectives in the region,» — George Vedernikov, Managing Director of the LSR Group, said. «Right now, up to 1 million of housing is commissioned in Kyiv annually, the prices comparable to the ones in Moscow and St. Petersburg — up to $2000 per sq. meter in the economy-class segment. That said, only comparatively small aerated concrete enterprises operate on the Ukrainian market, accumulated capacities of which are about 600 thousand cubic meters per year. In the result of this, this material is supplied to Ukraine from Belarus and Poland, and also from Turkey. Though we can claim today that the aerated concrete market has not been formatted in Ukraine, there is demand with no serious offer, we estimate the absorption of only Kyiv and region's market in about the same amount of 600 thousand cubic meters per year.»

For construction of the new enterprise in Ukraine, Aeroc International has acquired assets of a local house building industrial complex Berezanskiy PPDO, which had been out of business for 10 years and was bankrupt. A new aerated concrete enterprise is under construction in its production grounds with utilization of the already existing infrastructure. An acknowledged German firm HESS AAC-Systems will supply equipment for the new AEROC enterprise. The personnel are planned in the amount of 180 people and its hiring has already started. Dmitriy Latyshev is in charge of the construction on the spot; previously, he had worked as Deputy Chief Engineer of the RCP (reinforced concrete production) Plant-6 of OAO PO Barricada in St. Petersburg.

Lithuania. To implement the construction project of a new aerated concrete plant in Lithuania, Aeroc International is currently completing acquisition of a new ground with ready-to-use industrial infrastructure for construction of a new plant in the central part of the country. A new AEROC enterprise with 400 thousand cubic meters capacity is planned to be built there starting with «zero» level. The company is investing Euro 27 million, both of own and borrowed assets. The equipment will be supplied by the same German company HESS AAC-Systems. Industrial commission is scheduled for the end of 2008 — first quarter 2009. «The new enterprise in Lithuania will not only allow us to support local builders, but also provide supplies to Kaliningrad region and Latvia, where we currently supply aerated concrete from the Latvian and Estonian AEROC enterprises,» — Ivar Paplavskis, President of Aeroc International, said.

Both new enterprises belong to the aerated concrete sub-holding of the LSR Group — Aeroc International AS, which this way binds 5 production units at the same time: two enterprises under construction in Lithuania and in Ukraine, and also three already operating on full capacity enterprises, i.e. OOO Aerok St. Petersburg in Russia, Aeroc AS in Estonia, and Aeroc SIA in Latvia. Besides this, Aeroc has already started to look for a new ground and project design for aerated concrete production in Moscow region.

Aeroc International is a sub-holding of the LSR Group, the leading producer of autoclave aerated concrete in the Northwest part of Europe. Aeroc International currently has 5 industrial units: two enterprises under construction in Lithuania and Ukraine, and three enterprises fully operating in St. Petersburg, Estonia, and Latvia. The St. Petersburg enterprise is the largest producer of aerated concrete in Russia. Consolidated turnover of Aeroc International in 2007 will make about RR 1 billion. The strategic goal of the enterprise is solidification of its position of the aerated concrete market leader in the region covering • Russia and Ukraine • Scandinavian and Baltic countries • other NIS countries in perspective. After the start-up of the enterprises in Ukraine and Lithuania, the accumulated annual output of Aeroc International will exceed 1.5 million cubic meters of AEROC aerated concrete per year.